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On the ground and in the air, titanium waits for a lift

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From Wall Street to Everett, Wash.—where they're putting together the Boeing 787 Dreamliner—to the big aircraft forging shops around Los Angeles and Boston, as well as the Tier 1 subcontractors of the industrial heartland, anyone who makes, sells or works with titanium is wondering "What kind of market cycle are we in for?"

Probably more than any metal covered by AMM that isn't traded on an exchange, there's none whose history is more volatile than titanium, dependant in this country largely on the highly cyclical aerospace industry for 65 to 75 percent of its business.

Even the best and most thoughtfully considered titanium forecasts have a way of falling off track. Hardly anyone predicted that the runaway popularity of titanium golf club heads would almost single-handedly begin to pull the industry out of the doldrums that accompanied the end of the Soviet Union—whose collapse had thrust millions of pounds of formerly unmarketed titanium onto the world market during the recession of the early 1990s—only eventually for that production to migrate pretty much to Asia. And no one, of course, could have predicted the Sept. 11, 2001, terrorist attacks that helped send the market into a tailspin.

By 2005, with inventories of scrap and other raw materials at a low point and the industry awakening to the likely impact of the Boeing Dreamliner and other titanium-heavy commercial aircraft on future demand, and bolstered by unprecedented infrastructure demand for industrial and other non-aerospace grades from emerging economies, the market was propelled into another surge that ran into 2008, when it was tripped up by the global recession, 787 program setbacks and growing oversupply of the metal.

Now, with the Dreamliner apparently back on course after more than two years of delays (although its suppliers continue to hold their collective breath) and build rates for the fleet of "legacy" commercial airliners rising, titanium deliveries are moving out as prices improve. Speculation has begun on just where this trend will lead, and whether people will once again be talking scarcity a year or two down the road. Some argue that a replay of past shortages and disruptions is unlikely, citing a continuing inventory overhang in the supply chain as well as recent years' expansion in global sponge capacity. They note, for example, that not only Boeing but other consumers further down the chain have moved to "close the loop" on revert, making sure that scrap resulting from the ingots and mill products that they form and machine returns seamlessly to the production cycle.

Will it be different this time? Stay tuned.

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